Washington Update

Stricter Gainful Employment Rules May be on the Horizon

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In order to participate in federal student aid programs, the Higher Education Act (HEA) requires career education programs to “prepare students for gainful employment in a recognized occupation.” Under gainful employment regulations, Title IV loans can only be disbursed to eligible students enrolled in programs that lead to gainful employment in a recognized occupation. The HEA defines the programs subject to this requirement as non-degree programs at all colleges and most degree programs at for-profit colleges. As for academic dentistry, gainful employment regulations apply to allied or advanced dental education programs that terminate with the awarding of a certificate but not a degree.

Currently, the Department of Education (DE) is convening negotiated rulemaking sessions. On November 8, DE convened its second Gainful Employment Negotiated Rulemaking session. The department released draft rules for discussion purposes a week prior to the three-day meeting.

The draft rules which federal negotiators debated in the November meeting would judge programs based not only on their graduates' student-loan-debt burdens, but also on their former students' ability to repay their loans, whether or not the students graduated. Furthermore, the rules would require risky programs to seek federal approval to award aid and would require all programs to have the necessary state and accreditor approvals to qualify students to sit for licensing examinations. Programs at risk of losing eligibility at the end of a year would have to set aside money for borrower relief, either through a letter of credit, a state guarantee or the federal withholding of student-loan dollars.

It could be months or longer before a Notice of Proposed Rulemaking is published. In the meantime, stakeholders are certain to continue making their views known on the proposed standards. For more on this topic, see last month’s coverage in the ADEA Washington Update.
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